Anti-Money Laundering, Counter Financing Terrorism and Cybersecurity in the Banking Industry: A Comparative Study within the G-20

245 Pages·2023·4.992 MB·English

by  Felix I. Lessambo

PALGRAVE MACMILLAN STUDIES IN
BANKING AND FINANCIAL INSTITUTIONS
SERIES EDITOR: PHILIP MOLYNEUX
Anti-Money Laundering,
Counter Financing Terrorism
and Cybersecurity in the
Banking Industry
A Comparative Study within the G-20
Felix I. Lessambo
Palgrave Macmillan Studies in Banking
and Financial Institutions
Series Editor
Philip Molyneux, Bangor University, Bangor, UK
The Palgrave Macmillan Studies in Banking and Financial Institutions
series is international in orientation and includes studies of banking
systems in particular countries or regions as well as contemporary themes
such as Islamic Banking, Financial Exclusion, Mergers and Acquisitions,
Risk Management, and IT in Banking. The books focus on research and
practice and include up to date and innovative studies that cover issues
which impact banking systems globally.
Felix I. Lessambo
Anti-Money
Laundering, Counter
Financing Terrorism
and Cybersecurity
in the Banking
Industry
A Comparative Study within the G-20
Felix I. Lessambo
Fordham University
New Britain, CT, USA
ISSN 2523-336X ISSN 2523-3378 (electronic)
Palgrave Macmillan Studies in Banking and Financial Institutions
ISBN 978-3-031-23483-5 ISBN 978-3-031-23484-2 (eBook)
https://doi.org/10.1007/978-3-031-23484-2
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Acknowledgments
Writing a book is always a challenge. However, writing a book on
AML/CFT and Cybersecurity in the Banking Industry, a more daring
intellectual exercise.
I would like to thank my astoundingly supportive friends who moti-
vated me all along the project, knowing my dedication to the subject
and thought I am more than able to complete this project: Dr. Marsha
Gordon, Dr. Linda Sama, Dr. Lavern A. Wright, Dr. Lester Reid, Jordan
Romine, Yanick Gil, and Jerry Izouele.
Last but not least, thank you to all the original readers of this book
when it was in its infancy. Without your enthusiasm and encouragement,
this book may have never been ready.
v
Disclaimer
While the author has made every effort to ensure that the information in
this book is correct at the time of publication, he does not assume and
hereby disclaims any liability to any party for any loss, damage, or disrup-
tion caused by errors or omissions, whether such errors or omissions result
from negligence, accident, or any other cause.
This publication is designed to provide accurate and authoritative infor-
mation with regard to the subject matter covered. It is sold on the
understanding that the publisher is not engaged in rendering professional
services. If professional advice or other expert assistance is needed, the
services of a competent professional should be sought.
vii
Contents
1 Money Laundering and Combating Finance Terrorism 1
1.1 General 1
1.2 Money Laundering 2
1.3 Money Laundering Cycle 2
1.3.1 Placement 3
1.3.2 Layering 3
1.3.3 Integration 4
1.4 Combating Financial Crimes 4
1.5 International Money Laundering organizations 5
1.5.1 Financial Action Task Force 5
1.5.2 The Office of Foreign Assets Control 6
1.5.3 The Financial Crimes Enforcement Network 6
1.5.4 The Asia/Pacific Group on Money
Laundering 7
1.5.5 The Egmont Group of Financial
Intelligence Units 7
1.5.6 The International Association of Insurance
Supervisors 8
1.5.7 The Association of Certified Anti-Money
Laundering Specialists 9
1.5.8 ComplyAdvantage 9
1.6 The Failure of the Current System 9
2 The Cybersecurity Counteroffensive 11
ix
x CONTENTS
2.1 General 11
2.2 History of Cybersecurity 12
2.2.1 1920s 12
2.2.2 1930s 13
2.2.3 1940s: The Time Before Crime 13
2.2.4 1950s: The Phone Phreaks 13
2.2.5 1960s: All Quiet on the Western Front 14
2.2.6 1970s: Computer Security Is Born 14
2.2.7 1980s: From ARPANET to Internet 15
2.2.8 1987: The Birth of Cybersecurity 16
2.2.9 1990s: The World Goes Online 17
2.2.10 2000s: Threats Diversify and Multiply 19
2.2.11 2010s: The Next Generation 20
2.3 Types of Cyberattacks 21
2.4 Cybersecurity Risk vs. Traditional Risk 28
2.4.1 Application Security 28
2.4.2 Cloud Security 28
2.4.3 Infrastructure Security 29
2.4.4 Internet of Things (IoT) Security 29
2.4.5 Network Security 30
2.5 Cybersecurity and the Banking Industry 30
2.6 International Cooperation 31
3 AML/CFT, Cybersecurity and International
Organization 33
3.1 General 33
3.2 AML/CFT International Organizations 33
3.2.1 The Financial Action Task Force on Money
Laundering (FAFT) 33
3.2.2 The International Money Laundering
Information Network (IMoLIN) 34
3.2.3 Financial Action Task Force on Money
Laundering in Latin America (GAFILAT) 36
3.3 Cybersecurity in International Organizations 36
3.3.1 The Council of Europe: Action Against
Cybercrime 37
3.3.2 International Criminal Police
Organization (INTERPOL) 40
CONTENTS xi
3.3.3 International Telecommunications Union
(ITU) 41
3.3.4 United Nations Office of Drugs and Crime
(UNODC) 42
3.3.5 The Organization of Economic Cooperation
and Development (OECD) 43
3.3.6 G8 24/7 Cybercrime Network 43
3.3.7 The Internet Society (ISOC) 44
3.3.8 The International Cyber Security Protection
Alliance (ICSPA) 44
3.3.9 International Association of Insurance
Supervisors (IAIS) 45
3.3.10 International Organization of Securities
Commissions (IOSCO) 45
3.4 An International Strategy 46
3.5 Cybercrime Conventions 46
3.5.1 The International Cybercrime Treaty 46
3.5.2 The UNDOP International Treaty
on Cybercrime 47
3.5.3 African Union Convention on Cyberspace
Security and Personal Data Protection 47
4 AML and Cybersecurity in Banking Industry: Challenges 49
4.1 Overview 49
4.2 AML and the Banking Industry 50
4.3 Cybersecurity in the Banking Industry 50
4.4 Core Cybersecurity Risks in the Banking 51
4.4.1 The Compromising of Confidential data 51
4.4.2 The Compromising of Data Availability
or Systems 52
4.4.3 The Compromising of Data Integrity 52
4.5 Ensuring Cyber Security in Banks 53
5 AML/CFT and Cyber Security Laws in the United
States 57
5.1 General 57
5.2 AML/CFT Laws 57
5.3 AML/CFT Legislations 58